DomainFest 2011 – Day 1 Recap

Workshop: Domain Monetization Basics from Parking to CPL to CPA

Experts: Jeff Bartlett, Howard Hoffman, Jamie MacMillan, Joerg Schnermann
Moderator: Frank Schilling
From the program: “While this session is targeted to beginners and intermediates, advanced domain investors may also learn a thing or two from our expert panelists. Monetization options will be discussed, including parking, affiliate, lead generation, and content/development models. Bring lots of questions because we are allocating plenty of time for Q&A.”

[Selected Highlights]
Howard: Until you have a development plan, you want to park domains. What to develop is a function of your own creativity. With enough creativity, you can take a horrible domain and make money with it.

Jeff: Volume is key because a lot of advertisers can’t handle a lot of partner sites. They want quality and volume play, which is harder and harder to find.

Howard: “Just about everything is down.” Some things have held up better. Look at what areas are strong in the Internet. Coupons is one. On CNN, online shoes piece was being aired…good generic shoe related domains are good. Travel is still big.

Howard: Still buying domains. “There are still opportunities to buy good domains. The challenge is how to figure out which parking solution is best for each domain.”

Jamie: Two big camps are coupon sites and loyalty models (like UPromise), where a portion of proceeds go to organization. Arbitrage folks are third.

Howard: People are maybe looking to buy domains for 8-10x annual revenue. “I don’t want to sell for less than 30x.” If domain earns $5 per year, you can accept anything you want. Because a domain may not have revenue, you look at the intrinsic value of the domain, not stats. What he tells someone who offers a low-ball: “Thanks but no thanks.”

Frank: Sold under 250 names last year (acquired many thousands, so net to Frank’s portfolio was growth), and if you look back at the list of about 250 you’d say ‘wow those are some pretty bad names’ but the person that bought them knew what they were doing. He sold those domain names for under $7 million. For all those people who say traffic isn’t worth anything, think again. Frank’s more than 100 inquiries per day are listed on his blog.

Frank: When I think CPA, I think insurance. Those are expensive ads on TV, and it’s a high margin business.
Jeff: Insurance companies don’t know the domain name space. They’re using agencies and don’t buy/sell domains. They want to be on the internet, but TV stations are giving away space right now.
Frank: Spent $150,000 to buy remnant ad space on TV trying to arbitrage. I don’t know how cashforgold.com does it. It’s a lot of ads to show to get traction. I don’t know how they do it.
Howard: Repetition, repetition, repetition. Pay a lot, pay it over again. Consumers need to see ad 3x before they take action.

Jamie: Advertisers are struggling with how to monetize Facebook. Mobile has been huge growth in Q4. People searching a buying on phones will explode. Customers will look to new customer acquisition growth soon.

Frank: If cost is in $8 per name range and you get offer for $5,000, take it. Look at expired domains list there might be one great name, if you’re lucky. Most are bad names. They don’t get traffic, they just cascade. Carofthefuture.com still own, which was in pop mechanics in 1950s magazine. Thin veneer of good names that has any value. If you sell too quickly, you can’t buy them anymore. “Biggest domainers are registrars holding back the best names that have expired.”

Jamie:
1. Use clean traffic, not typo traffic because you get marked with that right away.
2. Capture more value for user than just passing along as sale.
3. Get critical mass with single advertiser or network (tiers – get more money with higher tiers).

Howard: (When asked what’s going to be big in domain names in 2011)
“That’s what I’m here to find out. My whole thing is to evaluate. I’m not the innovator. Someone in the audience is coming up with the next innovation.”

Welcome Remarks

Peter Celeste – SVP & GM, DomainSponsor

DomainSponsor: Objective to create a world class event on most relevant topics. Industry pioneers, great industry leaders.

Industry is changing in significant ways:
1. Mobile devices and apps that go with them
2. Changes in browser technology
3. Changes in ICANN fees
4. Changes in registrars and their policies

2009 NextGen Technology
1. More stable environment and platform
2. Roll out new features and enhancements (80 product releases in 2010)
3. Testing and optimization (2010 more than 50 optimization tests on own portfolio before rolled out)

2010 International Expansion
DomainSponsor was making 35% parity in 2009, but in 2010 worked and are not at 110% parity.

2011: announcing Precision Targeting Engine
It’s a new product that provides a single destination bringing together a wide variety of direct advertisers and ad network feeds to bid on your traffic. Direct advertisers, ad network, search providers who will bid on your traffic to maximize your domain investments.
* You no longer have to settle with for results from one provider
* You no longer have to deal with the complexities of managing multiple advertisers
* You won’t have to worry about how to monetize blocked and international traffic
* You can how get your traffic in front of direct advertisers

Presentation: State of the Industry: 2011 and Beyond

Jeff Kupietzky – CEO and President of Oversee.net
From the program: “Jeff will present his top 10 prophecies for 2011. His presentation will equip you with interesting insights on how technology, finance, consumer and other trends will impact the way everyone connected to the domain industry does business in 2011 and beyond. Improve your ability to successfully deal with these key trends by attending this important State of the Domain Industry Address.”

50% growth in Oversee aftermarket revenue

10%+ growth in Moniker registrar

Dramatic growth in European operations

10%+ increase in RPC and monetization

Added 50 new employees in Oversee

Resolved major litigation

Acquired several lead generation properties (including ShopWiki)

Broke into mainstream press at CNBC, CNN and SmartBusiness — an achievement for Oversee and the industry

When you sell a domain name you get more comparables, more info on pricing and more investing in the space. So share your domain names sales information.

10 Predictions by Jeff for 2011
1. Increase in premium domain name sales (especially over $5,000,000 mark). Anyone can own the generic category domain name for less than 30 second advertising spot on TV.
2. Registries will vertically integrate with registrars especially due to introduction of new gTLDs. .me Afilias and Godaddy. Neustar announced white labeling new gTLDs. Verisign sold off security assets, is solely in domain name business, has big cash reserve, and who knows what it’s going to do.
3. IPO window will open again as evidence by Demand Media successful IPO.
Demand Media is centered on enom and 500,000 domains they own. They built a good story on content creation, but their base Is the domain names they own. And that the market said you’re worth more than the NY Times, this says a lot about the power of domain names.
When one “lighthouse” company goes public in a particular segment, it sets a price for the remainder of the companies that are followers. Lighthouse IPO
4. There will be a record year of M&A from the large reserve of cash hordes.
5. Google will face real competition that will change their approach to the channel. Google will become more partner friendly: The adored phase to revered phase to questioned phase.
6. Customer service will be killer app to leverage social networks. Q&A on Facebook from person asking how to monetize domains – “use our Snapnames” was their answer, of course.
7. Tablets within mobile will rise.
8. New site development will focus on reducing number of clicks to get to actual application functionality. Google -> blekko -> qwiki. Creditcards.org has done A/B testing and optimization to get user closer to getting a credit card (owned by Oversee).
9. Value of traffic will be assessed for its data value along with its current category RPM. Will other people value the user or traffic, rather than the category information? Precision targeting engine is technology to understand what user wants and can we leverage that information to get them closer to what they’re looking for.
10. Pro football will come to LA. LA Overseers (Oversee sales team) might bring a football team to Los Angeles.

Summary of key trends:
• Emergence of industry leaders dominating their segments – but proliferation of those platforms
• Premium on innovation – developing solutions that get closer to the consumer adding real value to the ecosystem
• Availability of capital through large tech M&A and lighthouse IPOs

Keynote Presentation: Luck & Perspective

Bob Parsons – CEO and Founder of Go Daddy
From the program: “Bob will not only provide valuable insights into the domain name business, but will also share his story of ‘Luck and Perspective’ in ways that will inspire people looking to improve their businesses and their lives. Don’t miss this rare opportunity to hear this visionary leader and internet marketing innovator speak.”

Inspiring stories from Bob on growing up, facing challenges in school, joining the Marines, and how discipline of service to his country led him to be successful in his two companies:

Sold Parsons Technology to Intuit for $64MM, “no partners, no other investors — so it kind of worked out.”